Is it Safe to Invest in Cann Group? All You Need to Know About Cann Group
Cann group was established in 2014 in Australia with the vision of researching and developing cannabis based products. It was the first company in Australia to obtain Cannabis Research and Cultivation Licences by the authorities in Australia. These licenses allow Cann group to grow cannabis in Australia for research and medicinal purposes.
These licenses were granted in 2017 and since then the company has been researching and developing cannabis based products. Cann group has set up research labs and cultivation facilities to help facilitate research on Cannabis. The company aims to create feasible conditions, in order to set up basic infrastructure and a fully integrated business model for the legalised cannabis industry.
We have covered Cann group on our blog in the past, you can use the search box to look for past articles on Cann group. In this article we are going to see the future investment outlook for Cann group.
This is the current stock performance for Cann group. As it can be seen, the stock price of Cann group is at a low point compared to last 5 years of performance. In the long run this may seem like poor performance but compared to the last six months, the Cann group stock is showing a bearish trend.
This graph shows last 6 months of stock price movements and it can be clearly seen that the stock price is showing signs of improvement. There is however still a question about the profitability of Cann group.
The graph shown above, shows the revenue and net profit positions of Cann group over the last 3 years. It can be seen that the group has been consistently posting increasing losses. The revenue in the last quarter of the 2019 fiscal year was also very low. Because of losses, Cann group stocks do not pay out dividends, which is something long term investments need to bear in mind.
The Beta value for Cann group is 0.95, which is actually a good indicator. Beta shows the volatility of the stock in relation to the market. So a stock with Beta value of 1 has exactly the same volatility as the market, a stock with beta value higher than 1 is highly volatile and a stock with beta value of less than 1 is less volatile than the market.
Beta values can be read in both ways, depending on what type of investment strategy you follow. If you are looking for short term gains, then you would want the stock to be more volatile but high volatility adds more risk to your trades. A stock with low volatility allows investors time to make their trading strategy and time their trades in a better manner.
News and Developments
If you have invested in stocks or studied the market, you will understand the importance of news and developments on the stock price. Any favorable news can give momentum to a stock and any bad news can make a stock crash. Which is why it is very important to keep an eye out for relevant news and developments.
As far as Cann group is concerned, January 2021 has been a good month for them. The new year brought with it good news of $3.2 million tax refund by the government. This refund is for carrying out research and development in the medicinal cannabis sector. Cann group aims to reinvest this refund into further research and development.
Responding to this news, CEO Peter Crock stated that
“The refund that we have received under the R&D tax incentive program is an indicator of the company’s commitment to research in the medicinal cannabis sector.
We’ve recently conducted a close review of these R&D programs to ensure we are prioritising our investment appropriately and will continue to see meaningful and beneficial outcomes from these activities.”
So this is good news and we can expect to see more refunds in the future, while this research is not going to turn the losses into profits but it is going to have some impact.
Apart from this the last quarter reports also came out for Cann group and they were not very overwhelming. The company reported only $99000 cash receipts from customers. While this is very low, the company states that the reason for low revenue has been supply chain issues due to the lockdowns and regulatory issues that are causing delays in the roll out of new products. The company expects these bottlenecks to be sorted out over the next year, after which the revenue situation is expected to get better.
So is Cann group a good investment for 2021? In simple words, no. Unless you are looking at a very long term of 3 to 5 or perhaps next 10 years, investing into Cann group right now is not going to be a good idea because there is not enough to hang on to.
Cann group is still a very young company in an industry that is very young and if we look at Australia in terms of infrastructure for the Cannabis industry, then we can see that the infrastructure is not yet at that level to support fast growth.
So the infrastructure is not at that level to support fast growth for the company and then on top of the the company itself is not at a mature stage yet. The losses are too great for the moment and the company is too focused on researching and developing the products for future.
All of this means that the company is simply not going to be profitable for short term investors. The share prices are expected to remain between $0.9 to $0.3 range for the year. So unless you are looking to make some quick profits through volatility and timing your trades, we`d advise you against investing into Cann group for 2021.
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